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2015

Schulich School of
Business, York University
Sudin Garai [213678495]

[SmartMart Simulation Write-Up]


This document describes the understanding of SmartMart simulation and the various decisions taken based on
different scenarios

1. What will be fundamentally important for you to keep in mind in order to help make this
business successful?
As per the basic understanding of the company SmartMart wants to bring the experience of healthy
and organic foods to consumers. As per companys core strategic statement it wants to inspire
employees, suppliers and consumers around a healthy lifestyle and supply quality organic products to
support that lifestyle. As per the data a typical SmartMart customer is a health conscious individual or
family who does not mind paying a little extra for products they can feel about. SmartMart as a
community is also eager to conserve the nature. Currently SmartMart is under pressure; its core
differentiator is being diluted by low cost competitors such as CSAs. So to be successful in the business
it has to take some strong strategic decisions in the near future. As per the basic understanding of this
company this is involved in such a business where bringing the best for the community and the
customer is the main priority. Whatever initiatives they take they cannot deviate from the core values
of healthy lifestyle. Out of various stakeholders the major ones are:
Consumers: The company is in a business where there main motto is to bring the best quality of
foods and healthy lifestyle to its consumers. So the strategy they want to adopt in the future
needs to keep that in mind.
Community: The company is working to conserve the nature. Organic foods are environment
friendly and lots of customers are interested in buying organic foods because they know and
care about the mother earth. So to keep the customer base intact or even make it stronger it
needs to focus on keeping its core values intact.
Suppliers: Suppliers have been the key of SmartMarts success till date. The quality products
that it has been offering to its consumers are because of the supply chain this company has. So
the strategy they want to take should keep their suppliers benefit in mind.
Employees: As per the survey one major reason for its success and customer loyalty is the
experience of shopping and helpful behavior of its employees. The labor cost for this company
is also below industry standards of 35%. So in future it must think about its employees in
whatever decision it takes.

2.
a) Identify two specific areas of disagreement that you encountered (e.g. different groups
wanted different things that could not be mutually achieved). Who were the stakeholders
and how did the interests conflict?
As per the decision to expand and compete with bigger players out of four major stake holders two
areas of disagreement was between Shareholders and suppliers.
Shareholders: Shareholders were not very happy with the expansion strategy. They felt it might
make the company too thin and risk the underlying values which will not be sustainable. Apart
from that they think in short run the share values might go up with short term investors looking
to rip the profits but it wont last long.
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Suppliers: With this expansion strategy local suppliers are not happy as they think that
company might let them go and completely rely on global suppliers. But at the same time global
suppliers need to have the capacity to supply. A very tactical decision has to be taken in terms
of global and local suppliers.

b) For each of the areas you mentioned in 2a, explain how this situation would be
realistically managed in a real-world scenario. Feel free to question or change the
response you gave in the simulation.
To tackle the situation in the real world few tactical and careful steps needs to be taken. In the
simulation along with the expansion strategy two other major decisions were taken. One where we
want to bring Bio-fuels in our stores through acquisition and the other one was to implement Organics
2.0 with FDA.
The major conflicts we faced with the expansion strategy can be handled with these two decisions.

With the new product offering we will be entering a new market and a new supply chain. We
will use that to strengthen our brand image and grow our market share. This will give us an
edge with other competitors in the long run and also build the trust in our consumers about our
core values. Apart from that we want to implement organics 2.0 which will have strict
guidelines for a product to be certified as organic. This will eliminate the small and low quality
product stores from the market. This in long run will make the companys growth sustainable
and make the shareholders happy.
The local suppliers are not happy with the decision but global suppliers are thrilled with this
decision. From a realistic point of view we have to understand that it might not be possible for
global suppliers to meet out demand. So we have to speak with the local suppliers and provide
them the opportunity to grow to a global category. This will help us retain the quality as well as
our core strengths of success.

c) Which decisions in this simulation did you find most challenging? Explain
The most challenging decision was to expand into bio-fuels by acquisition. All the options in this
category had its own pros and cons. The strategy in which we want to expand by acquisition was the
one which I personally felt will create a long term value for the company.
Expanding into a new segment of market with no prior experience is very challenging. At the same
time we want to maintain the quality of offering. The environmental advocates will keep an eye on us
and wants to see if we are using this strategy as a green wash. Ro satisfy all the needs, mitigate the risk
entering a new supply chain and build the long term expertise this is the best strategy. Through this we
will start by acquiring small players and then build our own expertise in the segment and in long term
build our own supply chain to maintain the quality of the offering.

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3.
a) Look back at your answers to question 1a. How was your original thinking challenged or
confirmed?
My original idea was to keep the consumers, community and suppliers happy. With the strategy the
consumers are happy but they have their own expectations and fears out of this expansion. We as a
company are trying to meet those demands.
Conservation of the community or nature is one of our major mottos. We are bringing innovative
products to help this initiative.
Finally, we want to keep our suppliers happy. Although the local suppliers are not happy with the
decision we want to give them a chance to grow and maintain a healthy relationship with them.
b) You paid $20 for this simulation. As a customer, please describe the relationship
between your use value of this simulation and the exchange value you paid.
The use value of this simulation is that I get to understand how a real life scenario can be and also it is
not always about one decision rather there are a series of decisions one has to take to create a long term
value. Generally the cases we do asks us to make one solid decision but through this I was able to
understand one has to understand the consequences of each decision and take the next step forward to
mitigate them.
On the other hand the exchange value of this decision is 20$ which is very nominal. In real life people
have millions of dollars at stake. So having a simulation like this really helps in broaden our mindset.

Total word count: 1138

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